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Earth to FDP!

We are about four months into the new government here in Germany. As so often seems to be the case in politics and people, the current government seems to have mis-interpreted what the voters wanted to say.

It should not be so surprising, really. It is difficult to get a good unfiltered view of how voters feel when you live behind a wall of handlers and advisers. Politicians are still just people and are just as susceptible to wishful thinking as anyone else. The FDP is on the verge of learning this lesson the hard way.

The FDP, usually called the business friendly party, is firmly rooted in individual rights. If you are looking for an American equivalent, the libertarian party is the closest fit… though analogies of this kind are always dangerous. The FDP (which is the coalition partner for the majority CDU party) has scored serious points with protections of individual rights and personal data from proposed government plans designed to locate all sorts of bad people such as terrorists and hijackers.

But the FDP has really missed the boat on the tax issue. They pushed very, very hard for tax cuts this year. Their arguments have been somewhat vague, though. It is easy to draw the conclusion that they believe in Keynesian economic theories (see http://en.wikipedia.org/wiki/Keynesian_economics for more on this). But is that really the case?

A scandal just this past month revealed that the tax policies of the FDP may be more “client driven” as some German pundits like to say. The FDP received €1 million donation from a single donor who is a hotel magnate who has now received a significant tax break for the hotel industry, lowering the standard 19% tax to only 7%.

In times of economic upheaval, the FDP proposes cutting taxes and increasing spending. It does sound Keynsian… but even the appearance of such bias seemed to be enough to send the FDP down the polls in terms of support. I would go so far as to say that the many FDP voters were voting out of protest to the CDU rather than embracing the FDP. The last CDU/SDP government was becoming increasingly unpopular with the exception of Angela Merkel herself.

Mrs Merkel, at the same time, took a lot of heat from her own CDU party when she refused to get into the mudslinging and negative campaigning that is all so typical of political races around the world. She seemed to be trying to set a higher tone for her vision of Germany. So it is unfortunate that her position is tarnished by the fortunes of the FDP and their seeming disregard for how their tax policies will affect public services. The CDU is increasingly seen as devoid of ideas and vision and is merely moving forward on inertia.

The individual states in Germany were unusually vocal about the cutting of tax revenues by the CDU/FDP federal government. They were against it, even CDU stronghold states were loudly in opposition. In a modern Germany where reform is now being forced on it from Brussels (as part of EU integration) and the religion of privatization at all costs is a new religion it is public services which suffer most visibly.

Services at public kindergartens are being cutback, including:

elimination of hot lunches

elimination of kindergarten supplies such as toothbrushes

reducing the number of slots available

Additionally:

Train service in Germany has long been a victim of a lack of investment.

Roads are in increasingly bad shape.

Voters do not like what they see. Could it be they were trying to send a message to the CDU and SDP by voting for the FDP (and other parties) in such large numbers? And now that the FDP has blown it’s chances at making real improvements in the basics of society, it too is losing support.

If all of this is true, we’ll probably see another SDP/Green government after the next federal elections. And if they don’t learn today’s lessons… we’ll just be in for more political ping-pong elections while Germany drifts towards a modern world that lacks proper investment and coordination in the “uncool” things like infrastructure and education but instead plays up to sexy tax cuts that polls show German voters do not even support… but tax cuts are more flashy on campaign materials.